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Ministers to be briefed on banking union progress

Preparations for the European Union’s landmark banking union will dominate a meeting on Tuesday (8 July) of European Union finance ministers.

Danièle Nouy, in charge of bank supervision at the European Central Bank (ECB), will give ministers an extensive briefing on the progress made in its assessment of €3.72 billion of risky assets held by large eurozone and some non-eurozone banks. The exercise, known as the asset quality review, kicked off at the start of 2014.

Once it has concluded, the European Banking Authority will subject the same banks to a stress test, examining how their balance sheets would hold up were the eurozone economy to shrink by 1.5% or if there were a 21% collapse in eurozone housing prices. Andrea Enria, the chair of the EBA, will also attend the briefing.

The results of the two exercises, known together as the comprehensive assessment, will be announced in October, before the ECB takes over responsibility for supervising the eurozone’s largest banks, together with some non-eurozone banks – around 140 in total. Anticipating these reviews, banks including Unicredit and Deutsche Bank have already begun to raise additional capital.

EU finance ministers will also discuss how the EU’s banks should pay into a centralised bank bailout fund. The agreement on the single resolution mechanism and the accompanying rulebook on winding up failing banks gave rise to deep divisions between member states. Each member state is now battling to ensure that the methodology for calculating an individual bank’s contribution to the fund does not hit its own banPreparations for the European Union’s landmark banking union will dominate a meeting of European Union finance ministers on Tuesday (8 July).

Danièle Nouy, who is in charge of bank supervision at the European Central Bank (ECB), will give ministers an extensive briefing on the progress made in the ECB’s assessment of €3.72 billion of risky assets held by large eurozone and some non-eurozone banks.
The exercise, known as the asset-quality review, began at the start of 2014.

Once it has concluded, the European Banking Authority will subject the same banks to a stress test, examining how their balance- sheets would hold up if the eurozone economy were to shrink by 1.5% or if there were a 21% collapse in eurozone housing prices. Andrea Enria, the chairman of the EBA, will attend next week’s briefing.
The results of the two exercises, known together as the comprehensive assessment, will be announced in October, before the ECB takes over responsibility for supervising the eurozone’s largest banks, together with some non-eurozone banks – around 140 in total.

Anticipating these reviews, banks such as Unicredit and Deutsche Bank have already begun to raise additional capital.

EU finance ministers will also discuss how the EU’s banks should pay into a centralised bank bail-out fund. The agreement on the single resolution mechanism and the accompanying rulebook on winding up failing banks gave rise to deep divisions between member states. Each member state is now battling to ensure that the methodology for calculating an individual bank’s contribution to the fund does not hit its own banks disproportionately.

The European Commission published a consultation on 20 June seeking views on issues such as how the riskiness of a bank’s assets should affect the size of its contributions. The new rules are expected to be adopted in September.ks disproportionately.

The Commission published a consultation on 20 June seeking views on issues such as how the riskiness of a bank’s assets should affect the size of its contributions. The new rules are due to be adopted in September.